I am sure that — as The New York Times indicated recently — there are instances of borrowers who are not treated as they should: with respect, responsibility and prudence.
But, on the whole, it is hard to find indications of widespread abuse, despite The Times‘s claim that “the practice of roping people into loans that damage them financially is all too common.”
We recently analyzed the Consumer Financial Protection Bureau’s complaint database to determine whether auto financiers were generating more complaints, which is an indication of advancing abuse. Yes, the raw number of complaints is higher in the first half of 2014 vs. the first half of 2013. But so are originations.
The better indicator is complaints per $1 billion of outstandings to normalize the volume of complaints against portfolio growth. For the 28 largest auto finance companies in the nation, complaints per $1 billion of outstandings fell to 2.9 from 3.9 during the same period in 2012. In other words, we’re talking about approximately three complaints for every $1 billion of receivables. Put another way, that’s three complaints for every 50,000 or 60,000 loans.
Just to put the vehicle finance complaints in perspective, but 2% of the 272,000 complaints currently in the CFPB database related to auto loans or leases. Did complaints per billion fall for every lender? No. But some saw dramatic improvements, and those equally deserve attention.
This is the third in a series of posts on the state of auto finance today.
